eBay, the US online auction giant, is being touted as a bidder for its smaller UK rival QXL Ricardo after the British dotcom survivor confirmed today that it has received a takeover approach.

Shares in QXL Ricardo rose 10.6 per cent to £16.70 following the announcement, valuing the online auctioneer at £771.2 million. At the height of the dotcom, in early 2000, QXL Ricardo’s share price reached £37.00, giving it a market capitalisation of £1.7 billion.

FTSE 250-listed business said today: "The company notes the recent movement in the company's share price and confirms that it has received a preliminary approach which may or may not lead to an offer being made for the company.”

In 2005, Florissant, the Dutch venture capital group and a QXL shareholder, made a hostile bid for the company. Although the bid did not succeed, Florissant retained a stake in the business.

In June, the Dutch group and Izaki, a consortium of Israeli investors, sold down their stake in OXL Ricardo but Florissant still holds 16.2 per cent of the UK company and the consortium owns 14.47 per cent.

Adrian Kearsey, an analyst at Evolution Securities, said: “eBay is the obvious choice and buying QXL Ricardo would be a strategically important move.”

QXL Ricardo has been building its presence in Eastern Europe, where it derives three quarters of its revenue with much derived from its Polish operation, and has market leading positions in countries such as Switzerland, leaving eBay trailing in the number two spot.

An acquisition of QXL will be easier now that it has settled a long-running legal dispute with its Polish management, paying £56 million to buy out the division.

In its full year results to the 12 months to March 31, 2007, which included figures from the Polish group, pre-tax profit rose by 222 per cent from £2 million to £9.75 million and sales increased by 53 per cent to £45.8 million.

In Eastern Europe, sales rose by 77 per cent to £32.7 million and in Western Europe revenue increased by 15 per cent to £13 million.

eBay has in the past made bolt-on acquisitions in Europe to buy market position. In Holland, it acquired Marktplaats, the leading Netherlands classified web site.

QXL Ricardo is only one of a very small number of businesses to have survived since the dotcom explosion in the late 1990s and 2000 when online businesses were bought, sold and valued at vast sums despite many having little trading history and little asset value.

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